Report: Federal Contract Spending Through the Roof

Our government and its workforce are there to create safe, thriving communities that benefit everyone. Protecting public safety, protecting food safety, protecting the environment, building mass transportation, providing education, and administering the justice system are some of the necessary functions that can only be adequately provided by a democratically elected government acting in the public interest. But when anti-government politicians take office, they defund and dismantle crucial government functions, forcing agencies to give up control of these functions to private businesses whose only goal is to maximize their profits, which would then be used to fund political campaigns.

As a result of the campaign to make profits off the government and taxpayers, government by contract has significantly increased over the past decade. According to a new report by the Congressional Budget Office (CBO), federal spending on service contracts went up 90% from $136 billion in 2000 to $259 billion in 2012. Who were the serial outsourcers? Leading the pack was the Defense Department, followed by Energy, Veterans Affairs, NASA, State, USAID, Centers for Disease Control and Prevention, Bureau of Prisons (BOP), FAA, Centers for Medicare and Medicaid, and National Institutes of Health.

DoD has been singled out as the biggest outsourcer of them all. In 2012, the largest share of DoD’s contract spending went to contracts for professional, administrative, and management services. These are functions that are supposed to be performed by federal employees, who are a lot cheaper than contractors. But because of pressure from anti-government politicians to dismantle the workforce, hiring freezes are being implemented and work has been either outsourced to contractors, who are two to three time more expensive than federal employees, or transferred to military personnel. 

Private businesses exist to make a profit, which is fine – unless they try to make a profit by inflicting harm on people through the government that’s supposed to protect public interest. The private prison industry, for example, has forced governments to round up more people and keep them there longer to meet bed space required in the contracts. When crime drops, state and federal governments still have to send inmates to private prisons to fill bed space and meet the quotas. Prisons are no longer used as rehabilitation or deterrence for crime; they are profit making machines. In 2011 alone, the industry took in more than $5 billion in revenue. Wall Street banks took notice and they are now some of the biggest investors of private prisons.  

For-profit incarceration is such a lucrative business that the three largest prison corporations have spent at least $45 million on campaign donations and lobbyists the past decade to keep lawmakers on their side. More than 41,000 federal inmates – about 19% of the federal prison population – were housed in private prisons in 2013. Corrections Corporation of America (CCA), the largest for-profit private prison corporation in America, pocketed $584 million from the federal government that year. Even though it’s a big business, attempts to find out how these private prisons are run have been met with resistance as for-profit prison corporations lobby hard to keep this information under lock and key.  

Because of the lack of transparency and access to data, even the Government Accountability Office (GAO) couldn’t tell whether private prisons are a cost-savings alternative to federal prisons. BOP told the GAO it didn’t keep that kind of data because there were no laws or regulations mandating the maintenance of such information. It further claimed that collecting such data would drive up the costs of the contracts themselves. After responding to the GAO, then BOP Director Harley Lappin retired and went to work for CCA.


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